In December, the median home price in Southern California surpassed the housing bubble-era highs, which is a milestone that took more than a decade to achieve. According to real estate data firm CoreLogic, the six-county region’s median price surged 8.2 percent from a year earlier to $507,500, which is once again raising concerns that housing is too costly. The housing bubble-era high in 2007 was $505,000, which was matched in September and November. However, when adjusted for inflation, the region’s median is still nearly 13 percent below the 2007 peak. Christopher Thornberg, founding partner of Beacon Economics, stated
It goes to show you just how outrageous the last bubble was — for us to take 10 years to get back to that nominal level.
The latest housing data reflect a competitive housing market in which prices have been rising for more than five years. Several economists believe today’s increase is more sustainable because it’s being driven not by risky lending, but by an improving economy that has historically low mortgage rates and a shortage of homes for sale. Unfortunately, rising costs are putting homes out of reach for many such as in Los Angeles County where only 22 percent of households could reasonably afford a previously owned house at the median price, compared with 26 percent a year earlier and 42 percent in 2012, according to data from the California Association of Realtors. Hopefully, there isn’t a repeat of what happened in when the housing bubble burst a decade ago.